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     FrontPage Edition: Fri 20 Jan 2006

Is Class B2/C Hospitalisation Affordable?



Is Class B2/C Hospitalisation Affordable?
By Chua Boon Loy1
An Excerpt
Every year, about 10% of Singaporeans are hospitalised. Within the public hospitals, around three-quarters of the patients would choose to stay in Class B2 and C wards2.
A larger proportion of patients from the lower income groups utilise such ward classes to enjoy high Government subsidies3.
As a result of direct Government subsidies, the average Class B2/C bills are relatively modest. In 2004, the average bill size for Class B2 and C wards were around $1,050 and $800 respectively (Exhibit 1).
Only one in 100 Class B2 and C patients had a bill exceeding $6,517 and $5,164 respectively.
Since the establishment of Medisave in 1984, Singaporeans in general have accumulated sizeable Medisave balances.
In 2004, total Medisave balances amounted to $32.1 billion. This represented an annual increase of 9.0% as compared with $22.7 billion in 2000.
As at end-December 2004, the average Medisave balance for all active accounts was $17,321. This is enough to cover more than 20 times the average Class C hospital bill or 10 times the 90th percentile Class C bill4. (Even when inactive accounts were included, the average Medisave balance was $11,228, 7 times the 90th percentile of Class C bill.)
Exhibit 2 gives a breakdown by age group of the average balances of Medisave members with active accounts as at end-December 2004.
Through regular contributions over their working years, the majority of Singaporeans have been able to build up healthy balances in their Medisave accounts which can meet their medical expenses and those of their dependants.
To be sure, healthy Medisave balances per se do not guarantee that patients¡¯ share of B2/C hospital bills are fully covered by Medisave, without out-of-pocket cash from the patients.
This is because the use of Medisave is subject to withdrawal limits. This is to prevent a premature depletion of Medisave monies which are more critically needed during old age.
The Medisave withdrawal limits for inpatient care are $300 per day of stay, and an additional amount (ranging from $150 to $5,000) for surgical operations performed. As an additional check, we have examined the impact of these withdrawal limits on affordability of B2/C bills.
We found that most of the hospital bills incurred at the Class B2/C wards will be fully covered by the maximum claimable from Medisave. Two examples ¨C one of an average (non-surgical) episode and the other of a major surgery ¨C are presented in Exhibit 3.

1 Chua Boon Loy is an Assistant Director / Senior Health Economist with the Healthcare Finance Division, Ministry of Health.

2 Refer to Annex: Exhibit A-1 for breakdown.

3 Government subsidies for Class B2 and C wards are 65% and 80% respectively.

4 Active accounts refer to accounts that have at least one contribution paid during the current and any of the preceding three months. Inactive accounts refer to accounts that do not have any contribution paid during the current and any of the preceding three months.

Source: MOH Information Paper: 2005/ 09

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